Update: Blackstone reads AHI!
At 9:31 am today, I posted the following:
In my uninvited opinion, Blackstone should do something, even as little as upping its bid by $0.50 per share [Easy for you to give away $175 million of someone else’s money! — Ed.], so as to demonstrate that its ardor matches Vornado’s.
Twenty-seven minutes later, at 9:58 am today, CNN reported this:
Thus, Blackstone has countered Vornado’s zwischenzug with one of its own — now it’s up to Vornado to find something else to offer. Can Vornado do it? Well, fair maiden Equity Office has shown where her heart lies:
In addition, Equity Office and Blackstone increased the cost of breaking up the deal, agreeing that Equity Office would pay Blackstone $720 million in the event of termination instead of the $500 million originally planned.
I have long since stopped understanding why Equity Office is so motivated to give Blackstone more money for failing.
First the walkaway fee was $200 million, then $500 million, now $720 million. (Further, I think the increase in breakup fee is greater than the $0.50 per share increase in Blackstone’s offer.)
While the Blackstone offer is still lower than the Vornado offer, Equity Office’s board has said it prefers the all-cash Blackstone bid because the board believes it has “certainty of value and virtual certainty of closing in the immediate future.”
Blackstone originally offered $48.50 a share, now it’s up to $55.50 a share, an increase to Equity Office’s shareholders of $2.45 billion (assuming 350 million shares outstanding), all of it generated by Vornado’s entry into the auction.
Whose hand will be on top when the music stops?
Yet at each turn, Equity Office’s management has sided with Blackstone, approving each higher Blackstone offer:
Real estate trust’s board unanimously approves the all-cash offer of $55.50 per share from the private equity firm, recommends shareholders’ OK.
You have three … last … bidding chances.
I ask, not rhetorically but in bafflement, will somebody please tell me what shareholder purpose is served by these ever-higher breakup fees?
Riddle me this, readers!
If you have a plausible reason why, email me at davidalexandersmith {overat} yahoo {dot} com.
